Plans
3/27/2018
The Current Status of Public Pensions Jean-Pierre Aubry Director of State and Local Research Center for Retirement Research at Boston College National Association of State Budget Officers Phoenix, MA March 30th, 2018
Overview
•
What is the current status of public pensions?
•
What have they done to improve their finances?
•
What about the future?
1
1
3/27/2018
Despite good returns, the funded ratio of public plans has remained flat since the financial crisis. Breakdown of Plans and Assets by Funded Status, 2015/2016 120% 100%
99.7% 84.9%
80%
72.6%
60% 40% 20% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Public Plans Database (2015-2016).
2
But, public plans are not all in the same position – they can be put into groups by funded status. Breakdown of Plans and Assets by Funded Status, 2016 60%
Percentage of Assets
Percentage of Plans
46% 47% 41% 40%
36%
17%
20% 12%
0% 80%
Source: Public Plans Database (2016).
3
2
3/27/2018
Interestingly, all three groups of plans were relatively well funded in 2001. Aggregate Funded Ratio by 2016 Funded Status, 2001-2016 120% 108% 100% 96% 90% 80%
92% 70%
60% 49% 40% >80%
60-80%
80% 60-80% 80%
60-80%
7.5% 7.4%
80% funded) o Adopt best measure of ARC. o Gradually reduce return assumption. • Middle plans (60-80% funded) o Adopt best measure of ARC. o Pay full ARC. o Gradually reduce return assumption. o Model investments after good plans. • Bad plans (
The Current Status of Public Pensions Jean-Pierre Aubry Director of State and Local Research Center for Retirement Research at Boston College National Association of State Budget Officers Phoenix, MA March 30th, 2018
Overview
•
What is the current status of public pensions?
•
What have they done to improve their finances?
•
What about the future?
1
1
3/27/2018
Despite good returns, the funded ratio of public plans has remained flat since the financial crisis. Breakdown of Plans and Assets by Funded Status, 2015/2016 120% 100%
99.7% 84.9%
80%
72.6%
60% 40% 20% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Public Plans Database (2015-2016).
2
But, public plans are not all in the same position – they can be put into groups by funded status. Breakdown of Plans and Assets by Funded Status, 2016 60%
Percentage of Assets
Percentage of Plans
46% 47% 41% 40%
36%
17%
20% 12%
0% 80%
Source: Public Plans Database (2016).
3
2
3/27/2018
Interestingly, all three groups of plans were relatively well funded in 2001. Aggregate Funded Ratio by 2016 Funded Status, 2001-2016 120% 108% 100% 96% 90% 80%
92% 70%
60% 49% 40% >80%
60-80%
80% 60-80% 80%
60-80%
7.5% 7.4%
80% funded) o Adopt best measure of ARC. o Gradually reduce return assumption. • Middle plans (60-80% funded) o Adopt best measure of ARC. o Pay full ARC. o Gradually reduce return assumption. o Model investments after good plans. • Bad plans (
